Home News

GST impedes the business for the small traders and merchants

SHARE

The New Goods and Services Tax (GST) regime has brought the world of headaches for small traders and dealers and for their e-commerce employers.

The Goods and Services Tax that became effective on July 1st, 2017, has been recognised as the largest tax reform in the country since independence. The new tax regime aims at substituting several union and state levies with a uniform tax.

However, the wholesalers and retailers are finding the new regime nothing but complicated. They are facing the complexity of product classifications and documentation requirements. Many small traders had to quit their businesses with e-commerce sites as they are not meeting the new legal requirements.

They are facing the complexity of product classifications and documentation requirements. Many small traders had to quit their businesses with e-commerce sites as they are not meeting the new legal requirements.Sellers are finding it difficult to get these new regulations straight even after many months of preparation.

Sellers are finding it difficult to get these new regulations straight even after many months of preparation.

The GST rate depends on the various products and services, ranging from 0 to 28 %, as well as numerous exemptions. While traders didn’t comply with the tax obligations regularly under the previous tax regime, the repercussions of not filing the returns properly now could cost you with penalties of INR 10,000 or even put you behind the bars for a term of 5 years. Traders with huge tax due would not be allowed bail.

More from The GST Blog: Government delves into e-commerce companies concerns on GST

In last few weeks, e-commerce companies both big and small have sacked several non-compliant sellers from doing business on their portal. Some of the small restaurants and businesses have dropped out voluntarily as they are not able to meet the requirements of the legislation.

Flipkart, the country’s biggest online retailer, said nearly 95% of its network of 100,000 merchants are GST compliant, but the some of the merchants were removed prior to implementation of GST.  Arch rival Amazon has retained around 200,000 merchants.

However, the e-commerce industry sees this economic revamp as providing a door for long-term economic benefits and growth. Businesses now aren’t required to pass through entry points in each region or go to several agencies in different regions.

E-commerce giants like Amazon and Flipkart sourcing products and locating warehouses at different locations for availing tax benefits would be able to minimise costs as the cost of transportation reduces and deliveries arrive faster.

SHARE
A pure vegetarian, who believes in reincarnation & law of karma and follows the philosophy of “Live and let others Live” because all living beings have equal right on the resources of this planet. Being from a finance background, he loves to write about business aspects of the trends.

Leave a Reply